Mizuho Financial Group, the nation's second-largest lender, said first-quarter profit dropped 16 percent, as Japan's negative interest rate hit income from loans and investments and failed to stoke broader borrowing.
Mizuho said Friday that April-June net profit fell to ¥132.6 billion ($1.28 billion) from ¥158 billion a year earlier.
The Bank of Japan's negative interest rate policy, launched in February, drove down already razor-thin loan rates and bond yields. But the move has yet to produce the desired economic boost while leaving banks with weak earnings: No. 3 rival Sumitomo Mitsui Financial Group said this week first-quarter profit fell nearly a third.
Mizuho's net interest income — a core measure of profitability — fell 16 percent to ¥215.6 billion. Net interest income is what banks earn from loans and bond and stock investment.
Earnings were also dragged down by smaller gains from selling equity holdings in a weaker stock market. Mizuho and rivals have said they are trimming the portfolio of stocks they hold in client companies, originally acquired to help promote business relations.
Japan's banks typically provide only minimal disclosure on earnings after the first quarter each fiscal year and don't conduct media briefings on their numbers.
For the full year through March, Mizuho kept its net profit forecast unchanged at ¥600 billion, down 11 percent from the previous year, and broadly in line with an average estimate of ¥596.4 billion by 16 analysts.
The top dog, Mitsubishi UFJ Financial Group Inc., is scheduled to report first-quarter earnings on Monday.
Analysts have said lenders' profits would be further hurt if the BOJ deepened the 0.1 percent interest it charges to a portion of excess reserves that financial institutions park with the central bank.
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